Aramco expands its foothold in South America’s LNG market

Aramco to increase ownership in MidOcean, invest in new stake in Peru LNG: Saudi Arabia’s state-owned energy giant Aramco is backing EIG-managed LNG company MidOcean Energy’s acquisition of an additional 15% stake in Peru LNG, bringing MidOcean Energy’s stake in Peru LNG to 35%, according to a statement. As part of the agreement, Aramco will also expand its stake in MidOcean Energy to 49%. The agreement will also bring Aramco’s indirect stake in Peru LNG to 17.2%. No details were provided on the expected timeline to finalize the acquisitions.

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The financials: Aramco will wholly finance MidOcean’s additional stake purchase in Peru LNG, the statement says, although neither the investment ticket for the share sale nor Aramco’s funding have been disclosed. The firm expects to reach financial close on its planned stake purchase in MidOcean Energy this quarter. The oil giant initially agreed in September 2023 to acquire a USD 500 mn minority stake in MidOcean Energy, although it did not disclose the size of the stake at the time.

Selling shareholders: Hunt Oil Company is selling down its stake in Peru LNG from 50% but will continue to be Peru LNG’s operator following the transaction. The pair are set to hold an equal foothold in the company after the transaction closes.

Background: MidOcean purchased a USD 256.6 mn 20% stake in Peru LNG back in April, according to Reuters.

Strategic investments: Peru LNG owns and operates the sole LNG export facility in South America — located 170 km south of Lima in Pampa Melchorita — which is one of only two production facilities in the region. The LNG plant has a 4.45 mmtpa processing capacity and comes equipped with two 130k m3 storage tanks and a 19.2 mmcf/d truck loading facility. The plant is supported by a fully-owned 408 km 1.2k mmcf/d capacity pipeline and 1.4 km marine terminal.

What’s next? Aramco plans to increase its drilling rigs to 300 by the end of this year and ramp up its gas operations by over 60% by 2030. The LNG market is forecasted to expand by 50% globally by 2030, with LNG capacity expected to almost double in the US alone over the next four years, Reuters added.